Why I don't think on-premises Exchange is dead

Some hold that on-premises software has no future because we will all be soon in the cloud. Well, maybe, but I think not. Exchange is certainly a fine application when run as part of Office 365 but the on-premises version is important to many companies, including Microsoft for some reasons that you might not have thought about.

One of the questions raised by some attendees at the recent Exchange Connections conference is the future of on-premises software. Apparently there’s quite a few people who think that Microsoft us busily killing off all its on-premises editions of server applications in the rush to embrace the cloud. In other words, products like Exchange 2013 might be the last in the line because Microsoft wants customers to use Exchange Online in Office 365.

I don’t buy this line of argument for many reasons. Here’s some of the more obvious that come to mind.

First, Microsoft would be silly to mess with the large and profitable Exchange installed base that they’ve been building since 1996. Some of the base will move to the cloud, but if companies lose faith in Microsoft, they might look at the Google alternative. I sincerely doubt that Microsoft would deliberately open up their flank to an attack by Google.

Second, once customers begin to lose faith in Microsoft’s commitment to on-premises software, Microsoft’s ability to sell other products into the Exchange installed base like SharePoint, Lync, Project, upgrades to Windows and Office, and so on is diminished. Account control is weakened further by doubts in customer minds, which is never a good situation for a vendor.

Third, although there’s no doubt that a large engineering group is doing lots of work on Exchange Online and less on Exchange on-premises, you have to remember that such a division of labor is unsurprising given the relative point in the life cycle of the two platforms. Exchange on-premises is very mature and feature rich and therefore needs less engineering (but it needs to be at the right level of quality). On the other hand, it’s a huge engineering task to create the kind of software that functions effectively and efficiently in a massive multi-tenant environment given the type of functionality that Office 365 delivers.

It’s true that Office 365 gets a lot of attention these days and that it sometimes seems that the Microsoft sales force wants to sell nothing more than a few more cloud seats. It’s also true that using Office 365 is the right and most appropriate future direction for many customers, especially those who have less than 1,000 users and who struggle with some of the challenges to maintain, secure, and upgrade their IT environments.

Metrics drives behavior and I suspect that some sales incentives are responsible for some of the activity and buzz that we see around Office 365. However, as pointed out above, there are many reasons for Microsoft sales teams to keep their on-premises customers happy.

The number of people running the on-premises version of Exchange will reduce over time as Office 365 takes on more of the load, but for the reasons outlined above, I feel pretty confident that we’re going to see Exchange 16 in the next couple of years (Exchange 2013 is Exchange 15, not the 15th version of the product but rather part of the Wave 15 releases of the Office applications). And Exchange 17 will follow Exchange 16 as sure as night follows day. Would anyone bet against this happening?

Discuss this Blog Entry 24

$100 CAD that we will not see Exchange 16.
Nobody needs it anyway and should not. If 2010 or 2013 works stick to it and once you can somehow mitigate risks of CU impact you will probably have fairly robust system.
Office 365 is a very viable option to all.

Happy to take your money. There is no doubt that Exchange 16 will be shipped. The needs of Microsoft's largest companies (like the US Army) will demand that a new on-premises version is delivered. QED. Send your check now.

Yes, I saw the article about the Army deployment of Exchange; I also know some of the people involved. An article doesn't necessarily tell everything. What is more certain than not is that given the current state of cloud technology, it is unlikely that an organization like that would leave its on-premises base in a hurry. The same goes for the HP 500,000 seat deployment described at Exchange Connections and covered by me in a blog. I don't see that in the cloud soon.

I am actually surprised that HP is not using their blueprint for "HP Branded O365" for internal use.
They actually have excellent set of info for Cloud or on prem deployments that I find of better quality vs. MS materials. With better than average skill set of end users they could use "self service" migration, as historically they had (and have) small mailboxes. Of topic ... Why would they stop employees from remote work is seriously puzzling ? You end up with cases like me ... Instead of adding value to the corp I keep responding to various blogs while on the train.

Two reasons Companies / Enterprises will always keep Exchange On-Premises.
1. Control and 2. Security.
Companies / Enterprises over 1000 seats care about Control & Security compare to small biz.
And after the NSA PRISM revelations Public Cloud security has been in questions.

The main problem i see, is that Microsoft is killing some of their own business (Silverlight for Example), so i don't think they really care about it if not in their new plans. On premises patch quality since Office 365 (Exchange Online) launch its horrible. All the patches needs a 2.0, i think Exchange 2013 would make a difference but still, patches are a pice of crap. Now I'm forced suggest "don't install patches after 2 months of release" and some customers just don't install them. Installing patches, even using a 100% microsoft software is a "going to fail" High Risk task.

There's no doubt that on-premises quality has suffered since the introduction of Office 365. I believe that part of this is down to the merge of the two code streams into a single build process, which now has to serve two masters. What I hear coming out of Microsoft is that there are some very real steps being taken to address the quality problems. The fact that they have delayed Exchange 2013 RTM CU3 is indicative that something is happening. Of course, the acid test will come when we see what CU3 is like. I do hope that it's not up to the same standard of recent patches as that will simply confirm the feeling that Microsoft's commitment to on-premises software has really weakened (to an unacceptable level).

Allow me to repeat this:
In a supply & demand economy the customers will tell the companies what they want, NOT the companies telling the customers what you need.
In this case we the customers (companies / IT Pros) will TELL Microsoft what we want.
And if the customers want On-Premises software we will get it anyway from Microsoft or from other vendors. Microsoft needs to understand who the Customer here is.
Many worldwide Companies / Enterprises I.E. 1000 seats and more want / need On-Premises software.

Luke ... 1000 seats - I am sure Tony can give you an example of 100K + Office365 and US Gov may get this kind of "Gold" service as well (Army too). This way Army can do what they are best at and Microsoft can do Office 365 = everyone wins.

Luke
Majority of business leaders don't want to hear about IT. There is an excellent paper from Dell executive research about this. Microsoft actually is a very good option for Cloud as if I am not mistaken they will sign "business agreement" shifting some risk away from customers. I am sure that Tony could elaborate on this. Not all IT decisions are smart and in many cases mandated by non-IT players based on articles from airplane magazines. I could argue that if let's say encryption was properly implemented before Cloud was deployed all Control and such arguments would not exist. But we tend not to use grey cells before and let the reality force this after the fact. So in my books the only question is reliability, scalability and performance. For US companies O365 or GApps are perfect.

When you add:
-The end of Forefront products.
-The fact that no Edge has been released for E2K13.
-The end of Master program.
-…
It is a clear and more and more imposed path for the cloud. If your company cannot go, the question is: should you continue to invest in this product when tightly integrated features you use disappear one after another as well as best expertise.

The question is not only if Exchange 16 or 17 will exist for on-premises deployments but also how many missing pieces will there be in the ecosystem?

"The fact that no Edge has been released for E2K13." This is perfect, at it removes one extra layer of complexity and saves you $$$ on Exchange license. Nothing wrong with letting SMTP directly to your HUB/Mail Server on your internal network :)

@KB
Just a correction here :-)
1. The fact that no Edge has been released for E2K13.
They are saying Edge is coming with Exchange 2013 On-Premises SP1.
2. The end of Master program.
Master program was too expensive.
3. The end of Forefront products.
You have many non-Microsoft On-Premises products that can do a good job as Forefront.

Edge is coming. I am pretty sure about that. All of the statements issuing from the PG indicate that this is the case. In any event, use the Exchange 2010 Edge - it does a perfectly good job.
The MCM program was a creature of its time. We do not need a program that delivers that level of education for such a high cost in time and money. We do need high quality training for Exchange 2013 and beyond, but that's available elsewhere and doesn't have to be delivered by Microsoft. The big issue with the program termination was the way that MSL conducted themselves and the subsequent impact on people and companies who had invested in MCM.
TMG and on-premises security is a business that Microsoft can leave to others. It is not something that they were especially good at and appliances are far better options for on-premises security. Actually, cloud services are an excellent option here too.

Word on the street is ;-) Tony will have Exchange 2013 On-Premises version of Maestro somewhere in the East Coast US. I am looking forward to that for learning Exchange 2013 On-Premises in class. Also Tony's Exchange 2013 On-Premises book is great too :-) which I am planning to buy it soon.

Why wait to buy the book? The pages won't mature and the text won't get any better if you wait. In fact, the text will become less valuable because technology advances all the time... CU3 appears, then CU4, then CUx... and all the time the book ages. Sad, but true.

Edges offer some unique features like recipient filtering and safelist aggregation through secure sync with AD. Forefront protection for Exchange integrates with edge capabilities. In general other AV AS solutions don’t integrate but replace those features with ldap queries and addins to be added in Outlook (berk).

With Forefront protection for Exchange 2010, you get multiple AV engines running at edge level, at transport level, at mailbox level. When you replace this by EOP or appliances at the border, you miss the internal transport and mailbox level or you have to also license a software product for internal protection…not really cost effective.

(rewording a French expression) If master program costs too much, try ignorance.:-)

You're right that the Edge server offers some advantages. You can get these now by using the Exchange 2010 Edge alongside Exchange 2013. I anticipate that a new Edge version will appear soon, but can't say whether it will serve the same purposes as its predecessor. Time will tell. In any case, Edge is there and available now to support features such as safelist aggregation.
As to FOP, I think that it is a retrograde step in Exchange 2013 to find that only a single malware engine is supported. However, while FOP was a nice product, there are plenty of other AV and AS products available to do the same job on a mailbox server (for both the Store and transport). Having a Microsoft offering in a space already well covered by ISVs doesn't make much sense. On the other hand, Microsoft needs to have a cloud service to support Office 365, so that's why they have EOP.
As to the master program, there's no doubt that it provided real value to those who went on it and the companies for which MCMs work. The problem with cost is that it serves as a limiting factor and barrier. Too few people went on MCM because of the cost to make it realize its potential. The question now is whether any other training can deliver (say) 80% of the benefit at (say) 30% of the cost. I hope so, and if this is possible (and I think it is), then it should be possible to train many more people and get an even bigger benefit from knowledge, experience, and expertise than MCM could ever aspire to deliver based on its course and speed at the point when it terminated.

Tony, You are always right.. here is the official announcement form MS that On premise will be still available towards Microsoft's Exchange future road map http://blogs.technet.com/b/exchange/archive/2013/11/13/exchange-server-the-road-ahead.aspx .. Thanks... :)